50c tourism tax coming into force after hoteliers lose court case

Government, hoteliers agree to implement incoming tourist tax as from June 20

The controversial 50c ‘bed-night’ tax for tourists is coming into force on June 20, the government and hoteliers have agreed.

The decision was taken after the courts ruled against the prohibition of the eco-tax contribution. The tax was initially planned for June 1, but an injunction filed by the Malta Chamber of Commerce temporarily blocked the tax.

The tax is of 50c per night, capped at €5 per tourist aged 18 and over. The contribution will apply to all accommodation guests including foreign students in Malta learning English.

Stakeholders, including the Malta Chamber of Commerce, expressed dismay and disappointment at not being consulted prior to original implementation date, forcing it to go to court.

Tourism Minister Edward Zammit Lewis has however defended the contribution as one that would help the same tourist operators: the money collected from the eco-tax will go towards a fund to embellish the country.

During the press conference, Zammit Lewis reiterated that the tax would be paid by the tourists – and not the operators – adding that the government was pleased that a decision was finally taken.

“We have already missed a week, losing out on €140,000 that would have gone into a fund for projects targeting infrastructural developments,” Zammit Lewis lamented.

The minister said that the government was not excluding a claim for complaint against those who had filed the injunction.

Fending off suggestions that the injunction was a result of communication breakdown, Zammit Lewis added that those who had filed the injunction had been included in the initial discussions.

MHRA president Tony Zahra explained that the tax would benefit tourists as well as Maltese people. He added that a 50c tax was ultimately insignificant and that operators had delayed implementation of the tax so far.

The sustainable tourism fund was projected to collect around €4.5 million, to supplement and complement projects aimed at improving the country's infrastructure and aspects that would impact the touristic product.

Zammit Lewis insisted that the tax was amongst the lowest in Europe, designed not to deter tourists.

Temporary injunction lifted

A temporary injunction against the introduction of a new tourism tax, imposed on the request of the Malta Chamber of Commerce late last month, has been lifted.

In a decree handed down this morning, Mr. Justice Joseph McKeon revoked the temporary injunction he had granted to the Malta Chamber of Commerce, together with seven local companies with ties to the local tourism industry.

Legal Notices 174 and 175 of 2016, by which the 50c tax per night per tourist over the age of 18 years, capped at €5 per visit, were enacted into law. It had been published on May 20 and was meant to come into effect on June 1.

The plaintiffs, all small to medium-sized enterprises who represent a substantial chunk of the local tourism operators, point out that 53% of English language students who come to study in Malta are over 18. Of these, 30% reside with one of the 1000 host families registered with the MTA.

The plaintiffs had argued that the sudden introduction of a new eco-tax would hit the tourism sector hard and jeopardise Malta's appeal to the sector, insisting that it was standard industry practise for companies to take bookings and payment well in advance of any arrivals. They feared that the cost of the immediate implementation of the legal notices would have to be absorbed by the operators as it could not be passed on to the consumer retroactively.

The court, in its decree, highlighted that the application was only addressed to the Ministers responsible and not the relative departments – which in itself was sufficient to render the application invalid.

However Mr. Justice McKeon went one further, also pointing out that the regulations under which the legal notices were issued specifically excluded the injunction.

The court revoked the provisional injunction it had granted.

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